2005 (10) TMI 58 - HC - Income Tax

Petitioner-company has prayed for a direction against the respondents for refund of the amount deposited by it towards tax deducted at source from the salaries of its expatriate employees - writ petition is disposed of. We make it clear that this order shall not be construed as authorising the competent authority from re-examining the issue regarding entitlement of the refund in favour of expatriate employees. This observation shall not however prevent the competent authority to re-examine or reopen the matter if otherwise legally permissible

Summary

Issues:
Petitioner seeking refund of tax deducted at source from expatriate employees' salaries.

Analysis:
The petitioner-company, engaged in providing marketing support for textile machinery, deducted taxes from salaries of expatriate employees deputed from Switzerland. The company deposited these amounts with income-tax authorities. Assessments against employees have been completed or time-barred, with no outstanding tax liability. Refunds have been allowed for some employees, but authorities have not issued refund vouchers in favor of the petitioner-company. The petitioner sought a mandamus for refund of Rs. 36.38 lakhs with interest.

During the hearing, the petitioner's counsel argued that the assessing authority delayed processing the refund request without justification. He emphasized the need for expeditious disposal to prevent financial loss. The respondent's counsel suggested giving the assessing authority time until March 31, 2006, to decide on the refund claims. The court noted that the issue was the refund of tax deducted by the company from expatriate employees' salaries, supported by orders granting refunds to some employees. The court directed the authority to examine the refund request promptly, passing a formal order by March 31, 2006, and requested the petitioner's cooperation in the verification process.

The court disposed of the writ petition with directions for the assessing authority to promptly process the refund request. The order clarified that it did not authorize a re-examination of the refund entitlement for expatriate employees unless legally permissible. The competent authority was allowed to re-examine or reopen the matter if legally viable. The court emphasized the need for cooperation from the petitioner in providing relevant documents for the refund verification process. The judgment aimed to ensure a timely resolution of the refund claim without re-evaluating the entitlement of expatriate employees to refunds.